Jakarta. The real question surrounding Indonesia’s Agreement on Reciprocal Tariff (ART) deal with the United States may not be the 19% tariff itself, economists said Monday, but whether Jakarta negotiated from the right baseline — and at what cost to policy autonomy.

The remarks were delivered during The Forum, a talk show hosted by B-Universe Media Holdings in Tangerang, where panelists examined the implications of the Agreement on Reciprocal Trade (ART) recently signed between the two countries.

Lili Yan Ing, Secretary General of the International Economic Association (IEA), said public discussion has focused too narrowly on the headline tariff reduction from 32% to 19%.

“In trade negotiations, what we discuss is not tariff rates, but the margin of preference,” she said. “Before April 2025, nearly 99.2% of US tariffs were already 0% under the Most Favoured Nation (MFN) scheme. That should have been the baseline.”

Framing the agreement as a cut from 32% to 19%, she argued, obscures the fact that the starting reference point was already low. “We should not bargain from 32% to 19%. The baseline was 0%,” Lili said, adding that the effective preference gained by Indonesia was minimal.

“This is not a genuine trade negotiation outcome. It reflects pressure from a more powerful country,” she added.

Iman Pambagyo, former Director General at the Trade Ministry, shared the concern, pointing to World Trade Organization commitments.

“At the WTO, tariff bindings are clear. The US average bound tariff is about 5% for agriculture and 3.4% for non-agriculture, while applied MFN rates were already close to zero,” Iman said. “Raising tariffs beyond those levels before inviting negotiations was already problematic.”

James Losari, an international trade and investment law expert, described the initial executive order imposing tariffs of up to 32% and 60% as creating a psychological “shockwave.” “When very high numbers are introduced, anything lower appears acceptable,” James said. “But we should have relied on the proper baseline.”

Beyond tariffs, the discussion turned to broader regulatory commitments under ART, including non-tariff measures, licensing rules, investment provisions and local content requirements.

Rizki Nauli Siregar of the Indonesian Economic Alliance (AEI) said that while tariff certainty could benefit competitive exports such as palm oil, cocoa, coffee and textiles, the more significant issues lie beyond tariff rates. “ART is not mainly about tariffs. The real concern is in the clauses beyond tariffs,” she said, noting potential compliance costs and provisions that could create preferential treatment toward the US.

She also cautioned against overlooking public health considerations, including standards for agricultural imports. “Trade policy must not weaken safeguards related to food safety and public health,” she said.

Despite criticism, panelists acknowledged that some elements of ART, such as efforts to reduce non-tariff barriers, clarify automatic licensing and review local content rules, align with reforms Indonesia needs. “But reforms must be driven by Indonesia’s own priorities, not external pressure,” Lili said. “And if reforms are necessary, they must apply universally, not only to one trading partner.”

James highlighted a clause requiring Indonesia to adopt equivalent restrictive measures if the US imposes economic sanctions on a third country, describing it as a sensitive sovereignty issue. “That provision could link Indonesia’s economic policy to US national security decisions,” he said.

Iman then added “Diversification in trade, services, investment and payment systems is essential. We need to be strategic.”

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